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Business credit cards can be great asset regardless of how big your organisation is. These cards have several key differences compared to standard credit cards. For instance, business credit cards are issued on the company’s credit rating, rather than an individual’s. They can also offer insurance policies and rewards that are tailored to the specific needs of the business. Typically, business cards offer more detailed statements and reports than standard cards, giving you more financial control.

Business Credit Cards

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A guide to Business Credit Cards

Running a business is hectic enough on a good day. Paying for purchases and services with a credit card can be an effective way to manage your company’s finances and can also guard against purchase and fraud protection.

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Businesses should shop around for credit cards in the same way an individual would.

Business to business

Gone are the days when a company director had to carry around large amounts of cash or, more antiquated still, a company chequebook. And while a debit card is a good way to pay your way, a credit card can be even better as it gives the company finances a period of interest free credit.

Credit cards are so widely accepted across the globe that they are also a convenient way to help you conduct business in person, online and over the phone.

Businesses should shop around for credit cards in the same way that an individual would. Whether you are a sole trader or a medium-sized business with employees, here are a few rules of thumb that will help you find the card best tailored to your business needs.

Ask yourself:

  • How much credit does the company need and do you want to apply for a slightly higher credit limit for a ‘just in case’ scenario? You may want to set a spending limit for the company and for each employee.

  • How many cards do you need and do all of your employees require cards?

  • How are you going to keep a record of employees' expenses?

  • What type of business are you in? If your business demands a high level of travel or entertainment then a card offering travel rewards, discounts on hotels and/or car rental will be useful.

  • Keep costs down. Look for a card without an annual fee and a good rate of interest.

The costs of a business credit card

The best way to use this type of card is to put your monthly expenses on it and repay it in full every month. Although these cards do offer benefits such as travel insurance, card protection and discounts with business services there is quite often a high APR attached.

Typically, this can be 22% APR for regular business cards and 29% for premium business cards. Of course, this won't kick in if you pay the card off in full each month.

Shop around

You can open a business credit card account with your existing bank or with another provider in much the same way as you would as an individual consumer. Do your homework and look around at who is offering what and how this is compatible with your business needs.

Some cards offer an international payments service which might save you time and money if you are paying manufacturers overseas. There may also be links with courier partners, information technology outlets and business suppliers.

The reduction of administration can be a benefit. If you pay for all your services and purchases on one business card it will be easy to keep track of your outgoings. If you are worried about this, budget first and then spend when you have a secure financial plan.

Your card provider may also be able to supply a report of your annual expenditure and a breakdown of VAT charged on purchases.

Check the terms and conditions of fraud and purchase protection with your particular card provider. According to APACS, the UK payments association, counterfeit card fraud increased by 46% to £144.3 million in 2007.

However, this was largely comprised of phone, internet and mail order (known as card-not-present or CNP) fraud, which was up by 37% last year, totalling £290.5 million. This type of fraud accounts for more than half of all card fraud losses.

Fraud is so damaging to business that it pays to look at the protection your provider offers and what they will do for you if you are caught in this unfortunate situation.

Other things to consider

  • It is best to avoid using your business card for cash. The interest charged can be very high and interest is charged as soon as you withdraw the cash.

  • Choose a mainstream card from an established provider – they are more likely to have the support (such as 24 hour customer service) and other customer support infrastructure that your business will need.

  • If you are going to issue a card to an employee be sure about how they will be using the card. You may wish to set guidelines as to what they can spend and for what purpose.

  • If your company has been established for a while and is in profit this will help your credit rating in gaining a credit card. Using the card wisely with regular payments will also help build an ongoing favourable credit record.


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